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Why OSI Systems Shares Rebounded

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of OSI Systems (NASDAQ: OSIS) have rebounded today by as much as 17% after numerous analysts defended the company following yesterday's 36% plunge.

So what: Yesterday, there were allegations that the company may have manipulated test data for its body-scanning systems and was trying to defraud the TSA and the government. The company adamantly defended itself, and today it's getting reinforcement from a number of analysts.

Now what: Oppenheimer is calling the drop a buying opportunity and has upgraded shares to outperform, believing the issues will be resolved without any material impact. Benchmark feels the same way, reiterating its buy rating and noting that the body scanners in question aren't a major source of revenue. Last but not least, Stephens also thinks the sell-off is overdone and still has an overweight rating and $93 price target.

Interested in more info on OSI Systems? Add it to your watchlist by clicking here.

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There is more than just how much the company make when investing in a company's stock. Ethical business conduct has always been a important criterion to evaluate the company's overall potential. With the hearing held lately, it tells us that the company has serious ethical issue to deal with. Don't forget that one of the result the company's stock has double over the past months has to do with the contract from Mexico gov't to sell its security devices which include the backscatter machine with no pre-equiped privacy software. A $900million dollars worth of contracts that maybe affect by the recent hearing held by the Transportation security subcommittee at the house.

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Evan is a Senior Technology Specialist at The Motley Fool. He was previously a Senior Trading Specialist at a major discount broker. Evan graduated from the University of Texas at Austin, and is a CFA charterholder.
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